RSS Feed

Legal Updates

More Articles: Latest Popular Archives

Employer wins restrictive covenants case against employees setting up rival business

Makbool Javaid, Partner - Simons Muirhead & Burton

In the case of Richard Baker Harrison v Brooks and Sambrook RBH is a leading distributor of minerals and chemical raw materials which it supplies to manufacturers worldwide. Mark Brooks and Andrew Sambrook were RBH’s former employees. Together in their roles with RBH they were responsible for a number of supplier relationships, including a German company called Hoffmann Minerals, a key client of RBH. A year before they resigned, Brooks and Sambrook set up a competitor business called SBS Sourcing Limited, also a mineral sourcing and supply services business.

RBH brought a claim to enforce obligations of non-competition, confidentiality, and post-termination restrictions against the employees. The company alleged the two of them had established SBS as a start-up competitor, and that they had actively sought to transfer business away from RBH to their own start-up, in breach of their contractual obligations.

The High Court looked at the various duties and obligations owed by the two employees and found that in addition to an implied term of good faith and fidelity, there was also an implied term of mutual trust and confidence, and in the case of Mark Brooks, a fiduciary duty, all of which had been breached. The couple had cooked up a plan to win the Hoffman contract for themselves and everything they did from start to finish was geared towards that end, including contacting Hoffman directly to offer their services under the SBS umbrella. The court ruled that claims of RBH in relation to liability and enforceability of the restrictive covenants succeeded in their entirety.

Finding it to be “trite law that during the currency of the employment relationship the employer is entitled to protect confidential information whether it amounts to a trade secret or not”, Judge Obi was satisfied that RBH’s “customer/supplier connections, the stability of its workforce and the protection of its confidential information are all legitimate business interests requiring protection”.

Receive more HR related news and content with our monthly Enewsletter (Ebrief)